Let Colleges Fail: The Power of Creative Destruction in Higher Education

by Richard K. Vedder

Everyone knows American universities are more expensive and less impressive than ever. But no one has come up with a plan to fix them. No one… Until now. Let Colleges The Power of Creative Destruction in Higher Education is the hard-hitting instruction manual America needs in order to save its institutions of higher learning. The solutions proposed herein are unorthodox. They’re stern. They’re tough. To some, they might even sound utterly shocking. But they’re bound to work. Richard Vedder, Senior Fellow at Independent Institute and Distinguished Professor of Economics Emeritus at Ohio University, asks the forbidden Why do we subsidize universities through taxpayer-provided grants and private donor gifts when the institutions are so obviously failing America’s youth? How can we justify this special status, while businesses offering far more useful goods and services are punished by confiscatory taxes—for simply turning a well-deserved profit? The history behind these questions is long, winding, and complicated. But the solutions to our current crisis are not. In fact, they’re as time-tested as the study of economics itself. Vedder reminds Americans of the concept of “creative destruction” (famously introduced by economist Joseph Schumpeter)—the idea that, because markets threaten to reallocate resources from unproductive to productive uses by “creatively destroying” failing businesses, markets actually help failing businesses adapt to the market’s ever-changing needs and realities. It’s sink or swim. And in the face of necessity, most businesses—or at least, those worth their salt—learn, however painfully, to swim. And if universities want to survive, says Vedder, they must learn to swim, too. But because we have cushioned them from the demands, necessities, and realities of public life, American colleges are weak, woke, and unforgivably obtuse. Their eye-stretching price tag just adds insult to injury. Read this book and what universities can—indeed, must—learn from the profit-making private sector; why big government needs to get out of the student loan business yesterday … and what will happen if it refuses to do so; why accreditation, though infrequently questioned or critiqued, might actually be unnecessary … or even bad; how privatizing state universities could actually open newer and more affordable finance options; what a healthy voucher/scholarship arrangement could look like; and much, much more … Daring in its analysis, practical in its problem-solving, and thoroughly readable in its prose, Let Colleges Fail is indispensable reading for those who want America’s colleges to thrive once again.

Genres: Education

283 pages, Kindle Edition

Published April 15, 2025

Reviews

[Paul Sand · Rating 5 out of 5]

To his credit, Richard K. Vedder puts his provocative thesis right in his three-word title: Let Colleges Fail. And, as hinted by his subtitle, he's referring to Joseph Schumpeter's concept of capitalism's "creative destruction", the notion that economic health isn't only driven by positive innovation of new goods, but also getting rid of the old, stale, less utile products, services, and methods. That's often painfully brutal, we might discuss how to ameliorate the agony, but it's often simply necessary for progress and improvement.

Vedder points to a telling fact: America's dynamic economy churns the top firms from year to year. (See Mark J. Perry: Only 52 US Companies Have Been on the Fortune 500 Since 1955, Thanks to the ‘creative Destruction’ That Fuels Economic Prosperity.) While the "top" US universities are pretty much the same bunch, year after year.

Even more indicative, as Macalester College's ex-President pointed out recently: the "sage on a stage" lecture model has been solidly in place for at least six centuries, back to when barbers performed surgery. Really?

It's not just simple lack of innovation. Vedder notes that although American higher ed is usually considered the best in the world, it has multiple problems that indicate its underlying malaise: falling enrollments; decreased public confidence; a censorious ideological climate; a (resulting) lack of intellectual diversity; ever-increasing cost; a manifest failure (in many cases) to teach students much; administrative bloat; increased inaccessibility to the poor; an overall poor "return on investment"; and (finally) inefficient and wasteful use of human and physical resources.

Vedder backs up all ten of these problems pretty convincingly. And points his finger at a number of underlying causes. Number one, of course, is the money spigot flowing from taxpayers, via federal and state governments, to higher ed. And there are more subtle government goodies, like tax treatment. (The university dining hall doesn't charge its customers sales tax; the pizza place a few hundred yards down Main Street is required to.) Accreditation is a woke racket. Athletics: an expensive distraction. Current governance is designed to maintain the cozy status quo.

So Vedder's overall recommendations are to reduce the role of government. Or at least make government efforts more effective. For example, if you must subsidize something with taxpayer cash, subsidize students, instead of throwing money at institutions. As private companies do, universities should "spin off" functions irrelevant to their educational purpose: e.g. housing, dining, sports, …

I've only scratched the surface; Vedder is full of good ideas. I'm not sure how many are feasible, even in the current crisis atmosphere; you'd think higher ed would be ripe for "creative destruction", but the forces dedicated to stasis are pretty powerful.